MacMillan Forces Amazon to Accept Higher Ebook Prices

The pricing wars seem to have begun in the electronic books marketplace: this weekend, Amazon.com removed titles from Macmillan, on of the industry’s largest publishers, from its electronic bookshelves in a dispute over pricing. Amazon maintains that electronic versions of ebooks should be around $9.99; MacMillan, conversely, believes its content is worth $12.99 to $14.99, but is willing to let Amazon set its own pricing if they hold off on selling ebooks for several months after a title’s hardcover release. Amazon disagrees, and has removed Macmillan titles from its service, although they’re still available on the broader Amazon.com Web site through third parties. However, Amazon.com seems to know it will eventually have to give in and sell Macmillan titles…although it sure isn’t happy about it.

“Macmillan [..] has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases,” Amazon said in a statement. “Ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books.”

Accusing a publisher of having a “monopoly” over its own titles is a bit of uncharacteristic hyperbole coming from a company like Amazon; nonetheless, Amazon is clearly unhappy that a publisher believes its content is worth more than the informal $9.99-per-title ceiling Amazon has set for electronic books. According to sources in the industry, the friction between Amazon and Macmillan has been building for some time, and stems from Macmillan’s agency sales model, wherein Macmillan sets the consumer price of its books and lets retails keep 30 percent of that amount. Macmillan also offers a wholesale model where publishers can set their own price and take 50 percent of the revenue, but reportedly Macmillan does not want to let Amazon have electronic versions of its books under the wholesale plan until six or seven months after a title’s initial hardcover release.

Macmillan has not publicly commented on the dispute.

It may be worth noting that Macmillan is one of the publishers already on board with Apple’s forthcoming iBooks Store that will launch in March along with the hotly-anticipated iPad; Apple has indicated prices for ebooks in the iBook store will range up to at least $14.99.